Use the Following Information to Answer the Question(s)below

question 5

Essay

Use the following information to answer the question(s)below.
Xavier,Young,and Zane operate a partnership with a complex profit and loss sharing agreement.The average capital balance for each partner on December 31,2011 is $300,000 for Xavier,$250,000 for Young,and $325,000 for Zane.An 8% interest allocation is provided to each partner based on the average capital balance on December 31,2011.Xavier and Young receive salary allocations of $10,000 and $15,000,respectively.If partnership net income is above $25,000,after the salary allocations are considered (but before the interest allocations are considered),Zane will receive a bonus of 10% of the original amount of net income.All residual income is allocated in the ratios of 2:3:5 to Xavier,Young,and Zane,respectively.
-Required:
1.Prepare a schedule to allocate income or loss to the partners assuming that the partnership incurs a net loss of $36,000 for 2011.
2.Prepare a journal entry to distribute the partnership's loss to the partners (assume that an Income Summary account is used by the partnership).

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Definitions:

Material Disposal

The process of discarding, recycling, or selling off waste materials or surplus goods in an environmentally responsible and cost-effective manner.

Equipment Disposal

The process of getting rid of outdated or no longer needed equipment in a safe, environmentally friendly, or legally compliant manner.

Maximum Return

The highest possible profit or yield that an investment or action can generate.

"As is" Basis

A term used to indicate that an item is being sold in its current state, with any existing faults or conditions, and without warranty.